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API Business Models

What's a good API business model? If you have an API, or you plan to have an open API, or just want to use APIs in your web or mobile app, what models make sense? See 20 different API business models. This comprehensive survey of the gamut of today's options covering anything from paid to getting paid to indirect.

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API Business Models

  1. APIBusiness Models 20 models in 20 minutes John  Musser,  ProgrammableWeb   @johnmusser   API  Strategy  Conference,  2013  
  2. yea rs  7   Is   ,000  AP tor ies   8  new s  s 3 ,000
  3. why, why, why?
  4. Why API? Many reasons…Drive innovation BizDev / LeadGen Marketing channel User acquisition New line of businessUpsell opportunity API as Product Increase footprint Device and mobile support Distribution channel Partner opportunitiesContent acquisition Drive traffic Increase stickiness Accelerate internal projects Extend product
  5. ET #1 I SECRA P An API strategy is notan API business model
  6. A very brief history of API business models…
  7. API Business Models, 2005
  8. API Business Models, 2013
  9. ET #2 I SECRA P Most APIs have >1 type of ROI
  10. Free
  11. Developer Pays
  12. Pay as You Go“Pay  only  for  what  you  use.  There  is  no   minimum  fee.”  
  13. Tiered Pricing
  14. Freemium
  15. Unit-based Pricing
  16. Unit-based Pricing
  17. Beware complex pricing
  18. Transaction Fee 2.9%  +  30¢   per  transacDon  
  19. Developer Gets Paid
  20. Affiliate Revenue Share: CPA +   =  $  
  21. Revenue Share: CPC
  22. APIs, now a billion $ business =      $2  billion/year   Affiliate Network “90%  of  what  we  do  is     business  through  APIs”   John  Wa9on,  Expedia  Affiliate  Network,  TravoluGon.co.uk,  April  2012  
  23. Recurring Revenue Share •  3%  of  $9.99/month  per  “Unlimited”  subscriber   •  2%  of  $4.99/month  per  “Rdio  Web”  subscriber    Affiliate Program •  7%  of  purchase  price  for  each  MP3  purchased   Recurring  revenue  every  month  for  as  long   as  a  subscriber  recruited  by  you  remains  an   Rdio  subscriber  
  24. ET #3 I SECRA PYou need to bake your business model into your API
  25. Indirect
  26. Content Acquisition3rd  party  applicaOons  built  on   60%  of  all  tweets  came  from  the  [eBay]  Open  PlaTorm   3rd  party  clients  [2010]  accounOng  for  $6.9  billion  in  Gross  Merchandise  Volume  (GMV)  in  2008.   Kumar Kandaswamy, May 31, 2012 Ryan Sarver, Chirp Conference, April 4, 2010
  27. Content Syndication
  28. API as SaaS upsell
  29. APIs, the glue of SaaS200  SaaS  companies  with  API  success  stories:   “We  find  that  if  our  customers  use  any   single  integraOon,  they  are  three  Omes   as  likely  to  convert  to  paid.”   Sunir Shah, FreshBooks Blog, Aug 25, 2010
  30. ET #4 I SECRA P API business models are not 1 size fits all
  31. NPR: Internal use = API growth NPR Music Facebook Integration iPhone app NPR iPad app Relaunched NPR mobile site Player 2.0 NPR News Android app NPR Music Homepage NPR Blogs Remix Improvements Made API Friendly Story Page Improvements Source  NPR.  Shown  in  millions  via  Ominture.  Last  updated  September  23,  2010.  
  32. Evernote: 99% internal calls External   usage   API  usage  from   internal  apps  
  33. Netflix platform: 800 devices Daniel Jacobson, Netflix Engineering Blog, July 9, 2012
  34. ET #5 I SECRA P Internal use may be the biggest API use case
  35. API Business Models
  36. Thank YouQuesOons,  ideas,  comments?   jmusser@gmail.com   @johnmusser